The present invention relates to a stock certificate, particularly to a stock certificate which is capable of being separated into first and second portions or components.
The present invention is part of a unique and economical service concept which separates the market value of common stocks of publicly held corporations on a basis which would permit holders to vary the emphasis between the component return and the risk elements of their common stock. This concept permits shareholders to own their common stock in a more flexible form of a unit of separable securities, each of which corresponding to a different right in the common stock.
One security can have essentially all the dividend attributes of the stock plus preferential claim to a specific amount of principal value and appreciation potential of the common stock, and the other can have residual claims to any and all other appreciation in the common stock's market value.
One form of carrying out this stock ownership plan is the unit stock investment trust which has a term of from five to ten years depending upon the particular common stock and investment requirements of the shareholders. According to the concept of the present invention, the trustee or custodian would issue to depositing shareholders, for each share of common stock deposited, a unit consisting of a PRIME (Prescribed Right to Income & Maximum Equity) component and a SCORE (Special Certificate of Residual Equity) or capital component. This concept may be applicable to many different common stocks and other variations of rights in the stocks may be utilized.
The PRIME component is a security which would embody the entire dividend attributes of the common stock as well as certain preferred stock or bond-like characteristics because of a redemption price assigned to it. Thus a holder of the PRIME component would be entitled to receive the entire dividends on a regular basis with respect to the stock, receive any subscription rights issued with respect to the stock, direct the entire vote of the common stock, and be entitled to a predetermined redemption price.
The SCORE component is a warrant-like security which has a fixed exercise price upon the termination of the trust, but unlike a conventional warrant, the holder will obtain the appreciation above the redemption price of the PRIME component in common stock of the trust without payment of the redemption price. During the life of the trust, the SCORE component is similar to a warrant whose exercise price is variable; i.e., its effective exercise price to acquire a share of stock from the trust is the cost of purchasing a PRIME component which under most circumstances would be less than the redemption price of the PRIME component.